Videocon plans Rs 6100 cr LCD facility in Italy

Italian govt chips in to help Indian company.

After becoming one of the largest global producers of cathode ray tubes (CRT), consumer electronics major Videocon Industries is beefing up its presence in LCD (liquid crystal display) panel manufacturing.

The company today announced investments worth euro 1.06 billion (Rs 6,100 crore) to set up a greenfield LCD panel manufacturing facility in Italy.

The LCD television segment is the fastest growing one in the TV sector. Analysts estimate that it would grow at a compounded rate of 70 per cent for the next four-five years. Videocon Industries would be investing ¤300 million through equity participation in the venture, while euro 700 million will be raised through bank loans.

The project will be partly financed by the Italian government with ¤ 180 million central government grant and an additional 40 million euros regional authority grant.

Venugopal Dhoot, chairman, Videocon Industries, told Business Standard financial institutions had already been tied up to finance the deal.

Spread across 150 acres, the LCD facility is expected to employ close to 1,000 people and have an annual capacity of 5.76 million LCD panels - four times its current production in Italy.

Videocon is already present in Italy through its acquisition of durables maker Thomson's assets. In 2005, Videocon Industries acquired the Thomson CRT plant and CRT research and development facilities at Anagani, Italy.

The deal put Videocon in the same league as Matsushita, Samsung and Philips, in manufacturing CPT (colour picture tubes).

Videocon has also re-engineered the Thomson plant at a cost of 300 million euros and invested about 171 million euros for research and development of plasma television sets. Currently, the company has a manufacturing capacity of 1.3 million in Italy which includes CRT televisions along with LCD and plasma televisions.

The company started the first line of production in 2005 while the third production line for plasma televisions and airconditioners commenced in 2007. Earlier, the Italian government had supported Videocon's acquisition of Thomson by offering a grant of 65 million euros.

The government also pitched in with taking care of manpower costs when the company was retraining employees at the Thomson facility. Videocon has retrained 700 personnel (50 per cent of the workforce) through local universities and training institutes.

According to analysts, the company's strategy of integrating the Thomson's CPT plants with the Indian glass shell operations helps it in reducing production costs.